Prospective customers often ask me for a detailed price quote for a remodeling project, addition, or new construction project. They’re asking for a detailed listing, by price, of items in the proposal: how much will the foundation cost; how much for the windows, tile floor in the bathroom, crown moulding in the living room, etc., etc., preferably broken down into separate materials and labor numbers. Along with many other residential general contractors, I usually say, “No, I don’t provide detailed quotes.” Frequently, although I’ve discussed their project on the phone and in their home, and I’ve invested a considerable effort and time into putting together an estimate or formal proposal, that’s our last meaningful conversation about their project. Why don’t I provide detailed quotes?
I don’t provide detailed price quotes because they don’t help me reach agreement with the customers I want, or the customers who want me. The detailed quote is often seen as the chief tool in the “apples-to-apples” comparison of contractors and their proposals. It seems reasonable: surely the best way to evaluate contractors is to find out what’s in their proposals, and how much they charge to do those things.
But detailed price quotes don’t work that way. The first reason is that contractor pricing isn’t that simple. When I price a job, my pricing factors are materials, labor, overhead, and profit. I calculate materials and labor based on my experience and on other measures; I include the costs of travel to and from the work site, and parking. I add the cost of cleaning up at the end of the day. I add an overhead number to pay for all the non-direct costs of running my business; and I add a profit margin. My profit margin pays me for 2 things – the risk that I take for undertaking a project, and the quality that I put into the project in excess of the industry average. The better I am, and the riskier the project, the higher the profit margin.
There’s a significant error likely in many of my individual items – I forget things, I probably underprice the things I like to do, and I overprice the things I don’t like to do, and I just make mistakes. But I add all the numbers up, and I have a total price for the project. I check the total price against a few rules of thumb – labor and total price are often certain multiples of materials costs; certain types of projects have typical per-square-foot costs, etc; I have a gut feel for how long a project should take; I remember how much money I made or lost on the last, similar project. I make some adjustments, and I offer a proposal to the prospective customer. The final price is usually considerably higher than the sum of the individual prices. I have never figured out how to take those numbers and that process and put them into a form that will help a prospective customer understand my pricing.
Another key element in my decision not to share my pricing detail is that a detailed quote is a valuable document. Because it includes a scope of work, it’s one of the big pieces of a project plan. I measure the time it takes to produce a price quote – for a small bath remodel, it may be 4 or 5 hours. For a larger project it may be days. That’s hundreds to thousands of dollars of my time, directly invested in my price quote. If a customer gives my detailed price quote to another contractor who didn’t or can’t do the project planning for him- or herself, that’s a gift from me to my competitor, of significant value. Often, all that competitor has to do to win the job is to undercut my bid by the value of my planning document. I’m not willing to make that gift to my competitors.
Finally, some customers and contractors see detailed price quotes as something to be negotiated. I don’t negotiate my prices, so I’ve never been inclined to provide pricing detail for that purpose.
Most of my customers never express an interest in a detailed price quote. They want to know the total price, and they want to know in detail what work is included in that price. If the budget and the price don’t match, then we talk about priorities, and what changes can be made to to the scope to meet the budget.
So if you ask a contractor for a detailed price quote and he or she says no, don’t be surprised.